Business Auto Policy

Business Auto Policy (BAP)

Definition

Business Auto Policy (BAP) — a commercial auto policy that includes auto liability and auto physical damage
coverages; other coverages are available by endorsement. Except for
auto-related businesses and motor carrier or trucking firms, the business auto
policy (BAP) addresses the needs of most commercial entities as respects auto
insurance.

Insurance covering the legal liability of franchised and non-franchised automobile, truck, truck-tractor, motorcycle, recreational vehicle, and trailer dealers for claims of bodily injury (BI) and property damage (PD) arising out of business operations. It includes two separate insuring agreements, "who is an insured" provisions, and "limit of insurance" provisions—one dealing with garage operations involving the ownership, maintenance, or use of autos and the other dealing with all other garage operations.

A contractual relationship that exists when one party (the insurer) for a consideration (the premium) agrees to reimburse another party (the insured) for loss to a specified subject (the risk) caused by designated contingencies (hazards or perils). The term "assurance," commonly used in England, is considered synonymous with "insurance."

A commercial auto policy introduced by Insurance Services Office, Inc. (ISO),
in 1993 to address the needs of the motor carrier (i.e., trucking) industry.
Coverages available include auto liability, trailer interchange, and auto
physical damage; other coverages are available by endorsement. The policy was
developed as an alternative to the truckers policy because of the changes
taking place in the industry. That is, the truckers policy is applicable only
for "for-hire" motor carriers, whereas the motor carrier policy is
appropriate for all types of motor carriers—for-hire, private, or a combination
of both types of operations.

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